We have applied a new technique to analyze the oxygen (δ¹⁸O) and hydrogen (δD) isotope ratios in speleothem fluid inclusions to reconstruct the temperature and rainfall history of southern Indonesia during the Younger Dryas (YD) event and the Holocene. The 12,640-year speleothem record, anchored by 33 uranium-series dates, shows that fluid-inclusion δ¹⁸O values vary in phase with speleothem calcite δ¹⁸O during the Holocene, suggesting that the speleothem calcite δ¹⁸O primarily reflects variations in the δ¹⁸O of local rainfall. Significant early to mid-Holocene decreases in both δ¹⁸O series are interpreted as an intensification of Australian–Indonesian summer monsoon rainfall in response to deglacial eustatic sea-level rise and flooding of the Sunda Shelf. Cave drip-water temperatures reconstructed from coupled measurements of δ¹⁸O in speleothem calcite and fluid inclusions remained relatively constant through the Holocene. This is consistent with reconstructions of Indo-Pacific sea-surface temperature (SST) based on analysis of Mg/Ca ratios in planktonic foraminifera. However, during the YD event, drip-water (i.e. cave) temperature was ~ 5 °C cooler than modern, which is substantially cooler than SSTs inferred from foraminiferal Mg/Ca, but consistent with coral Sr/Ca reconstructions of SST and terrestrial evidence for high-elevation snow-line depressions. Lower fluid-inclusion δ¹⁸O values during the YD indicate that the cooling was accompanied by increased monsoon rainfall. Taken together, the results suggest that the southerly penetration of the intertropical convergence zone (ITCZ) was largely influenced by the cross-equatorial temperature gradient, rather than local SSTs (and air temperatures). Our results provide new evidence for a rapid cooling of deep tropical air temperatures and repositioning of the ITCZ during the YD event.